Is the purpose of understanding internal control during the All Team audit to express an opinion on its effectiveness?
All_Team Franchise · 2025 FDDAnswer from 2025 FDD Document
In performing an audit in accordance with generally accepted auditing standards, we:
- Exercise professional judgement and maintain professional skepticism throughout the audit.
- Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedure responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
- Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of All Team Franchise Corporation's internal control. Accordingly, no such opinion is expressed.
- Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
- Conclude whether, in our judgement, there are conditions or events, considered in the aggregate, that raise substantial doubt about All Team Franchise Corporation's ability to continue as a going concern for a reasonable period of time.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 33)
What This Means (2025 FDD)
According to All Team's 2025 Franchise Disclosure Document, the purpose of understanding internal control during the audit is not to express an opinion on its effectiveness. The audit aims to obtain reasonable assurance that the financial statements are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes an opinion on the financial statements themselves.
The auditors' procedures include identifying and assessing the risks of material misstatement, examining evidence regarding amounts and disclosures, evaluating accounting policies, and assessing the overall presentation of the financial statements. While the auditors do gain an understanding of internal controls, this is to design appropriate audit procedures, not to evaluate the internal controls themselves.
All Team's auditors are required to communicate with those charged with governance regarding the audit's scope and timing, significant findings, and certain internal control-related matters identified during the audit. However, the ultimate goal remains focused on the accuracy and reliability of the financial statements rather than a specific assessment of the company's internal control systems.